Most people will focus on the lower prices, but we all should have been expecting those; the new information is more details on cross-brand leveraging and new synergies about which we had previously only been guessing. The two big parts of the announcement are the cross-platform selling that is planned in both directions.

First, at least in terms of likely roll out, many of Whole Foods' in-store brands will soon be for sale through Amazon's various outlets. For dry and canned goods, this makes perfect sense and will allow Amazon to sell a premium product at higher volumes than Whole Foods was likely to accomplish on its own. It also allows Amazon to capture more of the value in the supply chain through vertical integration as it now can capture some of the profit from the food processing step instead of being just a retailer. Retail margins, especially in food retailing, are very low (supermarkets average only a 2% profit margin) so moving into higher margin businesses is good news for the long-run profitability of Amazon.

Second, and as I predicted earlier, Amazon will also sell cross-platforms in the opposite direction. Shoppers will be able to make purchases on line and pick them up at a Whole Foods Market. This feature will be available as soon as Amazon can build some of their "lockers" in physical Whole Foods stores. This will allow us to buy staples and home good products at the low prices available on Amazon.com for items where we are searching mostly for value, purchase items where quality is important (and variable) such as produce, meat, and seafood in person at Whole Foods, and then leave the store with both sets of purchases.

This is quite likely the future of online grocery shopping. As the long line of bankrupt online grocery sellers testifies to, consumers want to see and touch at least some of their groceries to ensure the quality is what they are looking for. We want our bananas a certain ripeness and to see the fish is fresh. Yet we also like the low prices delivered by avoiding the upkeep on a physical store for many items that we are comfortable purchasing sight unseen (breakfast cereal, laundry detergent, etc.). Rather than forcing consumers to accept a tradeoff between these two channels for grocery shopping, the Amazon-Whole Foods merger is promising to create a hybrid.

Many commentators are going to focus on the announcement of lower prices at Whole Foods stores (and competing supermarket companies saw their stock prices drop on the announcement), but low prices were already available as nearby as the closest Walmart or Aldi. Yet, Walmart had not driven other supermarket brands out of business. A significant majority of grocery shoppers care about some features other than price or Walmart's market share would be even larger.

The big news here is confirmation that Amazon sees this merger as an opportunity to merge two food retailing channels into a single, more seamless, shopping experience. I suspect that over the next couple of years, this will be the biggest impact of this deal. The ball is now in the court of the other food retailers to figure out a way to match this ability to offer more products for sale in multiple ways so that whatever the customer wants, the customer can get, even if that means buying some of my groceries online and the rest in person. Amazon will force every retailer to think harder about all the channels we use to buy our food.

I am a professor of economics at The University of Georgia and consultant on economic issues to a variety of corporations and local governments. Taking a generally free market, libertarian perspective, I use economics as the lens to analyze government policies from the local...